ABSTRACT
There is an extensive literature on dependence on natural resources and economic development, much of it focusing on the negative consequences of declining long-term export prices and export earnings instability. In the 1970s much of this literature appeared to have little relevance to Saudi Arabia as the world's leading oil exporter, given the buoyant price of oil. Critics of oil dependence tend to use arguments based on the experience with natural gas in Holland, sometimes described as Dutch disease. Buoyant natural resource revenues from oil or gas push up the exchange rate and make other sectors of the domestic economy uncompetitive, not only in export markets but also in the home market as imports flood in.
